Lucknow,November 01(HS)As the burden on States with higher indebtedness will increase after withdrawal of compensation being paid due to implementation of Goods and Services Tax,all of them including Uttar Pradesh, are in favour of its continuation for a few more years.
The issue was raised by the state government at meetings with fifteenth Finance Commission team which had come to the state last month.No compensation will be paid to states after March,2022,after little over one and a half years.
Higher devolution of taxes to states during next five years beginning April 1,2020, will make good some of the losses.The gap can be otherwise filled by levying cess on goods like petroleum and petroleum products which are out of the GST if the Commission does not give weightage to it.
Appointed in 2017,it is likely to submit its report this month.Besides devolution of taxes for next five fiscal years,it will recommend grant-in-aid and decide on other financial matters.The term of Commission has been extended till November 30.
Kerala which had recently suffered heavy flood devastation was allowed to impose cess for two years to meet the bad financial situation.So,if other states are also allowed that will not be an unprecedented move.
Uttar Pradesh will suffer revenue loss of about Rs 10,000 crores in nine months of 2022-23,the first financial year of withdrawal of compensation.It will feel the pain more because of increase in indebtedness which is likely to go up further.At the end of March 31 next year it is likely to rise to over Rs 473,563 crores.The debt-State GDP ratio which had come down to 28 per cent in 2014-2015, will increase to 30 per cent.
The state’s aim to become a trillion dollar economy by 2024 cannot be achieved if it does not decrease population and accelerate growth.Capital expenditure especially in infrastructure sector has to go up. It constitutes 16.78 per cent of total population in the country,with density far above the national average of 382.
There is a big fall in percentage of people below poverty line and the per capita income has increased but the state is much below the national average in these areas.
Like Bihar and some other states it has too demanded special package.
